Concerns were raised after it emerged the fund sold 16 sites privately rather than by public auction.

In total, 16 sites across Wales were sold for £21m in 2012 to a company based in Guernsey called South Wales Land Developments. It says it paid above the market rate.

'Alarming'

Concerns were first raised by Conservative AM Byron Davies about the way the sites were sold.

Instead of an open tendering process, 18 property agents and developers were approached and the sites were bundled together in one portfolio rather than sold individually.

Mr Holley, former leader of Swansea Council, was an official representative of local government on the board.

Responding to South Wales Police's decision not to launch a criminal investigation, he said: "I'm very relieved about that because I know we have done nothing wrong.

"We've followed the guidelines, the rules, we have done everything according to what the governance of any board should do and I find it quite alarming that people who have volunteered to go on and help to regenerate Wales are then subject to this type of thing."

He warned people such as agents, solicitors and barristers could be put off working with the Welsh government.

The land varied from farms in Gwynedd to a former industrial site in the Cynon Valley and part of a business park in Newport.

The area with the greatest value was 120 acres of farmland near the village of Lisvane on the northern edge of Cardiff, which had been in public ownership for decades.

Claw back

The land was sold for around £15,000 an acre but four months later it was included in Cardiff Council's planning blueprint for new housing.

This paved the way for it to potentially rise in value by tens of millions of pounds.

There is a claw back mechanism which means the taxpayer will be able to share in any increase but that figure has not been revealed.

When asked why the board did not postpone the sale, Mr Holley said there was too much uncertainty in the planning process to know what was going to happen.

He said it was a "very long drawn out process" with "an enormous amount of legal activity".

Safeguard

RIFW was set up to redevelop town centres using European and Welsh government funds.

Mr Holley said many communities would now lose out on regeneration projects because the scheme, as it was originally intended, had been brought to a close.

The Welsh government said it was working with RIFW to safeguard the remaining "pipeline" of work.